A
Ask Price
The price at which you can BUY a currency pair. Also called the "offer price." Always higher than the bid price.
ATR (Average True Range)
A volatility indicator that measures the average range of price movement over a period. Used for setting stop losses and position sizing.
Aussie
Slang term for the Australian Dollar (AUD) or the AUD/USD currency pair.
B
Base Currency
The first currency in a pair (e.g., EUR in EUR/USD). When you "buy" a pair, you're buying the base currency.
Bear Market
A market characterized by falling prices and pessimistic sentiment. Traders look to sell (go short).
Bid Price
The price at which you can SELL a currency pair. Always lower than the ask price.
Bollinger Bands
A technical indicator consisting of a moving average with upper and lower bands based on standard deviation. Used to identify overbought/oversold conditions.
Break of Structure (BOS)
When price breaks a previous swing high or low, confirming trend continuation. Key concept in SMC/ICT trading.
Breakout
When price moves beyond a defined support or resistance level with increased volume/momentum.
Broker
A company that provides access to the forex market, executing trades on behalf of retail traders.
Bull Market
A market characterized by rising prices and optimistic sentiment. Traders look to buy (go long).
Buy Limit
A pending order to buy at a price BELOW the current market price.
Buy Stop
A pending order to buy at a price ABOVE the current market price.
C
Cable
Slang for the GBP/USD currency pair. Named after the transatlantic cable used to transmit exchange rates in the 1800s.
Candlestick
A chart element showing open, high, low, and close prices for a period. The "body" shows open-close range; "wicks" show high-low range.
Carry Trade
A strategy of borrowing a low-interest currency to buy a high-interest currency, profiting from the interest rate differential.
Central Bank
A national institution that manages monetary policy, interest rates, and currency stability. Examples: Federal Reserve, ECB, BOE.
CFD (Contract for Difference)
A derivative that allows trading on price movements without owning the underlying asset. Most retail forex is traded via CFDs.
Change of Character (CHOCH)
The first break of structure against the current trend, signaling potential reversal. SMC/ICT concept.
Commission
A fee charged by brokers per trade, usually per lot traded. Common on ECN/Raw spread accounts.
Consolidation
A period of sideways price movement within a range, usually before a breakout.
Correlation
The statistical relationship between two currency pairs. Positive correlation = move together; negative = move opposite.
Cross Pair
Any currency pair that doesn't include USD. Examples: EUR/GBP, AUD/JPY, GBP/CHF.
CySEC
Cyprus Securities and Exchange Commission. A major European forex regulator.
D
Day Trading
Opening and closing trades within the same day. No positions held overnight.
Demo Account
A practice account with virtual money. Used for learning and testing strategies without risk.
Divergence
When price makes new highs/lows but an indicator (like RSI) doesn't confirm. Signals potential reversal.
Doji
A candlestick with open and close at nearly the same price, showing market indecision.
Double Bottom
A bullish reversal pattern where price tests the same low twice before reversing up.
Double Top
A bearish reversal pattern where price tests the same high twice before reversing down.
Drawdown
The decline from a peak in account equity. Maximum drawdown is the largest such decline.
E
EA (Expert Advisor)
An automated trading program for MetaTrader platforms. Also called a trading robot or bot.
ECB (European Central Bank)
The central bank for the Eurozone. Its interest rate decisions heavily impact EUR pairs.
ECN (Electronic Communication Network)
A type of broker that connects traders directly to liquidity providers. Usually offers raw spreads + commission.
EMA (Exponential Moving Average)
A moving average that gives more weight to recent prices. More responsive than SMA.
Engulfing Pattern
A two-candle pattern where the second candle completely "engulfs" the first. Bullish engulfing = reversal up; bearish = reversal down.
Entry
The price level at which you open a trade.
Equity
Your account balance plus/minus any unrealized profit/loss on open positions.
EUR/USD
The most traded currency pair in the world. Euro vs. US Dollar.
Execution
The process of filling a trade order. Execution speed and quality vary by broker.
F
Fair Value Gap (FVG)
A price imbalance between candles where price moved so fast it left a "gap." ICT concept — price tends to return to fill these gaps.
FCA (Financial Conduct Authority)
The UK's financial regulator. One of the strictest and most respected regulatory bodies.
Fed (Federal Reserve)
The US central bank. Its decisions are the single most important factor affecting USD and global markets.
Fibonacci Retracement
A tool that identifies potential support/resistance levels based on Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%).
Fill
When your order is executed at a specific price.
Flag Pattern
A continuation pattern showing a brief consolidation (flag) after a strong move (pole).
FOMO (Fear of Missing Out)
The emotional urge to enter trades because you're afraid of missing a move. A common cause of poor entries.
Forex
Foreign Exchange. The global market for trading currencies. The largest financial market in the world (~$7 trillion daily volume).
Fundamental Analysis
Analyzing economic data, news, and events to predict currency movements. Opposite of technical analysis.
G
Gap
A space on a chart where no trading occurred, usually between Friday close and Sunday open.
GBP/USD
British Pound vs. US Dollar. Also called "Cable."
Going Long
Buying a currency pair expecting price to rise.
Going Short
Selling a currency pair expecting price to fall.
Golden Cross
When a shorter-term moving average crosses above a longer-term MA. Considered a bullish signal.
H
Hammer
A bullish reversal candlestick with a small body at top and long lower wick, showing rejection of lower prices.
Hawkish
Central bank stance favoring higher interest rates to control inflation. Bullish for the currency.
Head and Shoulders
A reversal pattern with three peaks — the middle peak (head) higher than the two side peaks (shoulders).
Hedge
Opening an opposite position to reduce risk on an existing trade.
Higher High (HH)
A swing high that's higher than the previous swing high. Sign of an uptrend.
Higher Low (HL)
A swing low that's higher than the previous swing low. Sign of an uptrend.
I
ICT (Inner Circle Trader)
A trading methodology created by Michael J. Huddleston focusing on institutional order flow, liquidity, and market manipulation.
Indicator
A mathematical calculation plotted on charts to help analyze price action. Examples: RSI, MACD, Moving Averages.
Inside Bar
A candle whose high and low are within the previous candle's range. Signals consolidation.
Interbank Market
The wholesale forex market where banks trade with each other. The source of retail forex prices.
K
Killzone
Specific time windows when institutional activity is highest and setups are most reliable. ICT concept. London Killzone: 2-5 AM EST; NY Killzone: 7-10 AM EST.
Kiwi
Slang for the New Zealand Dollar (NZD) or the NZD/USD pair.
L
Leverage
Borrowed capital that allows you to control larger positions with less money. 1:100 leverage means $1,000 controls $100,000.
Limit Order
A pending order to buy below current price (buy limit) or sell above current price (sell limit).
Liquidity
How easily an asset can be bought/sold without affecting price. Forex is highly liquid. Also refers to areas where stop losses cluster (liquidity pools).
Liquidity Grab
When price spikes through a level to trigger stop losses before reversing. Also called "stop hunt."
Long Position
A buy trade. You profit when price goes up.
Lot
A standardized unit of currency. Standard lot = 100,000 units. Mini lot = 10,000. Micro lot = 1,000.
Lower High (LH)
A swing high that's lower than the previous swing high. Sign of a downtrend.
Lower Low (LL)
A swing low that's lower than the previous swing low. Sign of a downtrend.
M
MACD (Moving Average Convergence Divergence)
A momentum indicator showing the relationship between two moving averages. Used for trend and momentum signals.
Major Pairs
The most traded currency pairs, all including USD: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD.
Margin
The amount of money required to open a leveraged position. Acts as a "good faith" deposit.
Margin Call
A warning from your broker that your account is running low on margin. You need to deposit more or close positions.
Market Maker
A broker that takes the opposite side of your trades. They profit from spreads and sometimes from your losses.
Market Order
An order to buy or sell immediately at the current market price.
Market Structure
The pattern of highs and lows that defines trend direction. Higher highs/higher lows = uptrend. Lower highs/lower lows = downtrend.
MetaTrader 4 (MT4)
The most popular forex trading platform. Offers charting, automated trading (EAs), and trade execution.
MetaTrader 5 (MT5)
The newer version of MT4 with additional features, timeframes, and multi-asset support.
Moving Average (MA)
An indicator showing the average price over a period. Smooths price action to show trend direction.
N
Negative Balance Protection
A broker feature that prevents your account from going below zero. Required by many regulators.
NFP (Non-Farm Payrolls)
A major US economic report released monthly. Shows job creation excluding farm workers. High-impact news event.
O
Order Block (OB)
The last opposing candle before a strong move. ICT concept — represents where institutions placed orders.
Oscillator
An indicator that moves between fixed values (usually 0-100). Examples: RSI, Stochastic. Used to identify overbought/oversold conditions.
Overbought
When an indicator suggests price has risen too far, too fast and may reverse down. RSI above 70 is considered overbought.
Oversold
When an indicator suggests price has fallen too far, too fast and may reverse up. RSI below 30 is considered oversold.
P
Pending Order
An order that will execute when price reaches a specified level. Types: Buy Limit, Sell Limit, Buy Stop, Sell Stop.
Pin Bar
A candlestick with a long wick and small body, showing price rejection at a level. Strong reversal signal at key levels.
Pip (Percentage in Point)
The smallest standard price movement in forex. For most pairs, 1 pip = 0.0001. For JPY pairs, 1 pip = 0.01.
Pipette
1/10th of a pip. The 5th decimal place on most pairs (or 3rd on JPY pairs).
Position Sizing
Calculating how many lots to trade based on your risk percentage and stop loss distance.
Price Action
Trading based on raw price movements without indicators. Focuses on candlestick patterns and support/resistance.
Prop Firm (Proprietary Trading Firm)
A company that provides capital to traders in exchange for a share of profits. Examples: FTMO, MyForexFunds.
Q
Quote Currency
The second currency in a pair (e.g., USD in EUR/USD). Shows how much quote currency is needed to buy one unit of base currency.
R
R:R (Risk-Reward Ratio)
The ratio of potential loss to potential gain. A 1:3 R:R means you risk $100 to potentially make $300.
Range
A market condition where price moves sideways between support and resistance without trending.
Resistance
A price level where selling pressure tends to prevent further upward movement.
Retail Trader
Individual traders trading their own money (as opposed to institutional traders).
Retracement
A temporary price movement against the main trend. Often measured using Fibonacci levels.
Risk Management
Strategies to limit potential losses, including position sizing, stop losses, and drawdown limits.
RSI (Relative Strength Index)
A momentum oscillator measuring speed and change of price movements. Ranges from 0-100. Above 70 = overbought; below 30 = oversold.
S
Scalping
A trading style focused on taking many small profits from tiny price movements. Trades typically last seconds to minutes.
Sell Limit
A pending order to sell at a price ABOVE the current market price.
Sell Stop
A pending order to sell at a price BELOW the current market price.
Session
A trading time zone. Main sessions: Asian (Tokyo), European (London), North American (New York).
Short Position
A sell trade. You profit when price goes down.
Slippage
The difference between your expected execution price and the actual price. Common during high volatility.
Smart Money Concepts (SMC)
A trading methodology focused on understanding institutional order flow. Similar to ICT concepts.
Spread
The difference between bid and ask price. This is a cost you pay on every trade.
Stop Loss
An order to automatically close a trade if it moves against you by a certain amount. Essential for risk management.
Stop Out
When the broker automatically closes your positions because margin level dropped too low.
Support
A price level where buying pressure tends to prevent further downward movement.
Swap
The interest charged or earned for holding a position overnight. Based on interest rate differential between currencies.
Swing Trading
A trading style holding positions for days to weeks to capture larger price "swings."
T
Take Profit (TP)
An order to automatically close a trade when it reaches your profit target.
Technical Analysis
Analyzing charts and price patterns to predict future movements. Uses indicators, patterns, and support/resistance.
Timeframe
The period each candle represents. Common timeframes: M1, M5, M15, H1, H4, D1, W1, MN.
Trailing Stop
A stop loss that automatically moves with price in your favor, locking in profits.
Trend
The general direction of price movement. Uptrend = higher highs/lows. Downtrend = lower highs/lows.
Trendline
A line drawn connecting swing highs or lows to visualize trend direction and potential support/resistance.
V
Volatility
The measure of how much price moves. High volatility = large, fast price swings. Low volatility = small, slow movements.
Volume
The amount of trading activity. In forex, often shown as tick volume (number of price changes).
W
Wedge
A chart pattern where price converges between two trendlines. Rising wedge = bearish; falling wedge = bullish.
Wick
The thin lines above and below a candlestick body, showing the high-low range beyond open-close.
Win Rate
The percentage of trades that are profitable. A 50% win rate means half your trades win.
Y
Yen
The Japanese currency (JPY). Third most traded currency in forex.
Yield
The return on a bond or investment. Currency markets are heavily influenced by yield differentials between countries.